THE suggestion by the State that an Easter 2008 deal to unwind Sean Quinn's secret stake in the former Anglo Irish bank was probably unlawful is "a bombshell", a court has heard.

Earlier this week, prosecution counsel told the trial of Sean FitzPatrick, Pat Whelan and William McAteer that a €460m lending agreement in March 2008 to unwind Mr Quinn's stake, involving substantial lending to the Quinns, was probably unlawful.

Yesterday, that submission was described by Patrick Gageby, Senior Counsel for Mr McAteer, as "a bombshell".

He said the prosecution had alleged late in the day that the whole scheme – and not just the lending – was unlawful.

Mr Gageby said the State's suggestion that a March 2008 scheme, which was "run by" the Office of the Financial Regulator – but did not proceed at that time – was probably unlawful was a bombshell and had been suggested by the State so it could say the lending to the Quinn children was unlawful.

A separate scheme to unwind Mr Quinn's stake, involving lending to his wife, five children and the so-called 'Maple 10', was executed in July 2008 and has given rise to criminal charges against the three men.

Mr Gageby said the State was trying to "put all the lending together" in what he described as "a new case".

BILLIONS

This, he said, was to get over the difficulties of proof in relation to the Quinn children, adding that he could not see any criminality in the commercial loans given to the Quinns.

Mr Gageby stated that Mr Whelan would not be "in the dock" were it not for the actions of Mr Quinn, who made a "spectacular gamble" on Anglo shares – and lost billions.

Mr Gageby said that Mr Quinn had received an administrative sanction from the Financial Regulator that was not even the equivalent of a District Court conviction.

Those who had to deal with the aftermath were now "in the dock", he added.

Mr Gageby said that while the circumstances surrounding the July 2008 loans were not ordinary, the lending was in the ordinary course of business for a bank and was not illegal.

The two things should not be confused, said Mr Gageby.

He also remarked that the prosecution claimed the July 2008 lending was a fraud on the market, yet there was no charge relating to a fraud on the market.

He asked if the trial was about how Mr McAteer had breached his duty as a director by failing to ensure Anglo was in compliance with the Companies Act 1963, then what was it that the prosecution said he ought to have done or not done.

The trial continues on Monday morning with the jury continuing its deliberations.